Brazil's Petrobras posts first annual profit in 5 years, despite writedowns (updated)

Vantage Drilling

27/02/2019 23:23

(Adds details of earnings, investor comment)
    By Gram Slattery
    RIO DE JANEIRO, Feb 27 (Reuters) - Brazilian state-run oil
firm Petroleo Brasileiro SA  PETR4.SA  reported its first annual
profit in five years on Wednesday as it swung to a net profit in
the fourth quarter, although one-time provisions and writedowns
led it to miss estimates.
    In a securities filing, Petrobras, as the company is known,
said fourth-quarter net income rose to 2.102 billion reais ($564
million), compared with a loss of almost 5.5 billion reais in
the same period a year earlier. 
    Chief Executive Roberto Castello Branco, who took the reins
in January, called 2018 the best year in some time, while adding
that there was still much more to be done across several
business segments.   
    Net income for full-year 2018 came to 25.779 billion reais,
the company's first full-year profit since 2013. That figure
widely missed the Refinitiv I/B/E/S estimate of 34.9 billion
reais, due in large part to impairments and contingencies
related to legal disputes.
    Earnings before interest, taxes, depreciation and
amortization, minus non-recurring items (adjusted EBITDA) rose
50 percent to 115 billion reais, just below the Refinitiv
estimate of 118 billion reais.
    Petrobras took charges of around 11.4 billion reais in the
fourth quarter for various impairments and money put aside as
judicial contingencies. 
    Among the major sources of writedowns was the settlement of
a royalties dispute with regulator ANP over an oil producing
zone known as Parque das Baleias, as well as an arbitration
dispute with U.S.-based Vantage Drilling Co  VTGDF.PK .
    "The results in our opinion are great. We've been living
with one-off charges since the first settlement of Car Wash,"
said James Gulbrandsen, chief investment officer for Latin
American investments at NCH Capital, referring to a graft
investigation that has hit Petrobras in recent years.
    The company's ratio of net debt to EBITDA fell to 2.34 at
the end of the year, beating the company's goal of 2.5 as widely
expected.
    The firm boosted production of oil and natural gas liquids
to 2.115 million barrels per day in the fourth quarter, up 5
percent from the prior quarter. 
    ($1 = 3.73 reais)

 (Reporting by Gram Slattery in Rio de Janeiro
Editing by Matthew Lewis and Lisa Shumaker)
 ((gram.slattery@thomsonreuters.com; +55-21-2223-7117))